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Net zero: the newest term in Ontario politics

The term “net zero” has appeared recently in Ontario politics, used by the Premier and others.

Up to now, “net zero” has been used for home building and energy use; according to the U.S. National Renewable Energy Laboratory (NREL) net zero means “the amount of energy you use equals the amount you produce.” Similarly, CMHC says “a Net Zero Energy house integrates high-performance, energy-efficient passive solar design and commercially available on-site renewable energy systems such as solar water heating, electricity and ground-source heat.”

No definition could be found in traditional dictionaries.

In Ontario, however, land of the inexplicable, “net zero” has been used by Premier Wynne, Energy Minister Chiarelli, Finance Minister Sousa, and Deb Matthews, Minister Responsible for the Poverty Reduction Strategy, to describe the salary/benefit offer on the table for the Power Workers Union/PWU members at Hydro One and OPG. Apparently, handing out shares in the still publicly owned Hydro One, along with an annual salary increase, reduces the future commitment to contribute to their pensions. It will be interesting to see the cost/benefit analysis on this one.

Liz Sandals, Ontario’s Education Minister can probably be credited as the first Ontario Liberal using the term “Net Zero” politically when quoted a year ago about expiring teacher contracts: “That doesn’t necessarily mean there’ll be no wage increases. Net zero means if you can find saving in one part of the collective agreement that you can have an increase in another.”

In the case of the contract now offered for Hydro One and OPG to their PWU members it appears that Energy Minister Chiarelli and the other Liberal Cabinet Ministers regard handing out free shares in a company they plan to privatize along with wage increases that will, in all likelihood, track inflation rates as a net-zero accomplishment. Translating the latter term from a building/house that produces as much energy as it consumes into a wage settlement package, in the eye of this former banker, is an analogy that any sane economist would have trouble accepting.

Somehow I suspect that the “net zero” settlement will not stop the continuing climb in electricity prices, it will simply allow the Liberal government to claim labour peace.

Perhaps next, Premier Wynne and her government’s actions will result in “net zero” electricity price, increases caused by “net zero” wind turbines and solar panels added to the grid!

Comments

The results of the Hydro one survey are in!!! Here is the link to my blog post about the survey and my summary of the results. Thanks to everyone who answered my survey about hydro one. Have a good long weekend.

I still have trouble following the pea in this particular shell game. First, increases in the wages of a public utility simply increase the rates that the utility will seek authority to pass on to customers. The government selling shares (now presumably held by taxpayers) to other parties may constitute diversification of ownership, but it would only constitute “privatization” if the shares were sold to private parties (arguably, only if a majority of the shares were sold to private parties, which the government has ruled out). It is not at all clear why this should have any bearing on the government’s responsibility, as ultimate guarantor of Hydro One’s debt, to pay the costs of Hydro One’s pension liabilities. The only link I can see is that the government would transfer shares in Hydro One to the Power Workers Union as “compensation” for a partial reduction in the government’s liability for pension liabilities. The union benefits but the workers lose? If this is what is happening, both taxpayers and ratepayers (along with the Auditor General) should be asking why things have to be made so complicated. One cannot help but think that the complication primarily helps to make the “net benefit” incomprehensible and therefore difficult to assess objectively.